A Health Insurance Glossary
Here's a quick run-down of some common terms you can expect to see in relation to health insurance. Understanding what these terms mean can help you make the right choice when you're selecting a health insurance plan.
Allowable Fee: The maximum amount an insurer will pay for a medical procedure.
Co-insurance: Some insurance plans require that you pay a percentage of the cost of covered medical services (usually between 20% and 30%). For example, your insurance company might pay 80% and you pay 20% of the cost of a doctor's visit. The amount you pay is the co-insurance.
Co-payment: Some insurance plans require that you pay a flat fee for covered medical services. For example, you might pay a co-payment of $10 or $15 for a doctor's visit. More expensive procedures usually involve higher co-pays.
Deductible: The amount you must cover for medical expenses before your insurance policy starts paying. Deductibles are usually made on an annual basis. For example, if your deductible is $250, you must pay that amount out of your own pocket each year before your insurance company will start covering the cost.
Fee-for-Service (FFS) Plan: A type of health coverage that does not restrict you in your choice of doctor or specialist. FFS plans usually involve payment of a deductible as well as co-payments or co-insurance.
Flexible Spending Account: Provide users with a way of paying for medical expenses that aren't covered by insurance, such as deductibles and co-payments.
Health Maintenance Organization (HMO): An organization that offers inexpensive insurance to large groups. Policy holders must visit providers in the HMO's provider network to be eligible for insurance, and must also select a primary care physician.
Health Savings Account: Combines a savings account with a high-deductible health plan. The savings account can be funded with pre-tax dollars, which can be used to pay for deductibles and other expenses.
Out-of-pocket maximum: The amount of co-insurance you must pay before your insurance company will pay 100% of the allowed amount for out-of-network claims
Point of Service (POS) Plan: A managed healthcare plan that allows you to choose from providers in and out of the network. However, non-network care is more expensive, with a deductible and co-insurance or co-pays required.
Preferred Provider Organization (PPO): A managed care option in which members can choose to visit out-of-network providers, but must pay more for doing so.
Primary Care Doctor (PCD): Anyone enrolled in an HMO must choose a primary care doctor (from a list of participating providers), who coordinates their healthcare and provides specialist referrals when necessary. The PCD may be a general practitioner, family doctor, pediatrician, or even an obstetrician.
Referral: An authorization from your primary care doctor to see a specialist or receive a special test or procedure. HMOs generally require that you obtain a referral for specialist care and procedures, while some managed care plans allow you to self-refer.
Schedule of Allowances: The amount your policy covers for each procedure.
Self-Directed Health Plan: A flexible healthcare plan that focuses on preventative healthcare by providing coverage for routine check-ups, diagnostic tests and screening, and immunizations.
Specialist: A doctor who is trained in a specific type of medicine, such as cardiology, dermatology, or neurology. Some plans require that you receive a referral from your primary care doctor before you can see a specialist.
Supplemental Insurance: Prescription, dental and vision plans are not always included in standard healthcare plans. Instead they may be offered as supplemental plans that can be obtained in conjunction with a managed healthcare plan.